For some states (VA, MD, and CO in my case), the S-Corp must make estimated tax payments on behalf of non-resident shareholders. It seems both me and TurboTax are confused as to whether or not these should be entered as estimated tax payments on my personal return (federal Tax Payments worksheet).
* If I enter the payments off of the K-1 where indicated, the Virginia return error check is ok but the Colorado error check (form DR 0108) complains that the entered amount is not included in the federal estimated tax payments worksheet.
* If I also enter the payments in my federal Tax Payments worksheet, they get double-counted and the refund amount is more than was paid.
Can anyone shed some light on this? I can see that it would make sense to include payments made on my behalf as estimated tax payments, the Colorado program is the only one that expects it, and if I do it is wrong.
these are not deductible by the S-Corp. rather they represent distributions to shareholders. s/h's treat these as like estimated tax payments to that state. each state probably has a place on its k-1 prepared in Turbotax to reflect these payments.
the problem comes in is these are distributions. in an S-Corp distributions are supposed to be proportional to the % of the stock held. no problem if just 1 s/h. but if more than one this can result in disproportionate distributions, it needs to be corrected as soon as possible. disproportionate distributions could indicate a second class of stock which would void the S election.
Yes, each state has a place to record these payments. The problem is the TurboTax Colorado state add-on throws an error if they are not entered on the federal Tax Payments worksheet, but counts the payment twice if I do.
Is this a program bug?
If not, how should I be entering these payments for Colorado so it doesn't count them twice but does not complain about me not entering them twice?